Employment in the North of Russia: Microdata Analysis

In the North of Russia employment and migration are closely related. The reduction in population and employment in the northern regions of the Russian Federation for more than two decades together with the high economic potential of the Russian North seems to be paradoxical. Perhaps this situation is related to the mismatch in demand and supply of labor in the northern regions of Russia. The model of the local labor market equilibrium and the theory of compensating differentials predict higher wages in the amenity-poor regions. It means that less qualified workers can earn more in the High North compared with the other regions of the country. The hypothesis was that less qualified employees have higher probability of being employed in the High North regions of Russia than in the rest of the country. Using the binary logit models, probabilities of being employed in the North of Russia and the rest of the country were estimated at the base of microdata of the Survey of the Labour Force, provided by the Federal State Statistics Service. The results showed that the population in the High North regions of Russia is more economically active compared with the rest of the country, what is especially true for women. The working age and professional education make the highest marginal effects in the North and the rest of the Russian Federation. Secondary and tertiary education increases, while primary education reduces, the probability of being employed in the High North regions of Russia compared with the rest of the country.